During the pandemic with restrictions in the UK and worldwide it’s been a challenging time for many businesses. However, in some cases not being able to operate at all or learning to in a different way has given businesses the time to stop and reassess their business and objectives and enhance their operations.
The change in circumstances all businesses have had to navigate in this last year has created, for some, an opportunity to deep dive into the business and reconsider internal processes that may have been outdated or never reviewed owing to time pressures of running the business whilst providing first class service.
Rightly so, businesses will have focussed on cashflow during the last 12 – 18 months. As the world begins to open again, now is the time to consider and ensure, businesses are returning to profit quickly – and effectively for the long term.
Matthew Gard discusses key areas of the business to review for profit.
Identify clients who pay the invoice amount on time and look at the extra costs and time some clients demand due to special requests, being slow at paying your invoices or questioning the costs. The time you put into these extra requests could be time you spend looking for new customers who value the product you offer and recognise the cost associated.
Combine this strategy with an incentive for your current customers to initiate referrals and you will gain more business.
So often processes are set and agreed upon but not reviewed, challenged or enhanced. Take time to review internal processes regularly and adapt them as business develops and the way of doing business changes too. An example of profit improvement review using internal processes would be looking at month end process and customer payment dates using the data held in accounting software. By highlighting slow payers businesses can challenge why some customers or clients are not paying within agreed terms therefore negatively impacting profit.
Products and services
The last 12-18 months have made us all think about the products and services we offer now and in the future. Restaurants have diversified into takeaways based on their main menus, smaller independent businesses have improved and enhanced their online offerings and delivery or click and collect, garages have offered pick up and drop off services for servicing and MOTs.
Every business has to adapt as the way in which the world does business changes, however in more recent times the products and services being offered now and, in the future, should ensure they include the scope for social distancing and working from home.
Importantly, when reviewing what products and services to offer, the costing and profitability should be high on the agenda to ensure any new offering doesn’t cost too much to make or do and is profitable.
An expert business advisor can help advise on any new products or services being considered and the positive or negative impact to the business in relation to profit.
Ensure stock levels are at the right level. If stock levels are too high, they are tying up cash which could be used for making more profit, trying something new or investing. If stock levels are too low businesses may not be able to accept a customer’s order therefore impacting profit, and possibly creating a bad customer experience.
Review all business expenses on a line-by-line basis and ensure the business is on the best rates. Light, heat and phone bills can often be renegotiated and should be reviewed annually before any fixed contract expires.
Taking the time to compare your business to one also in your industry can help identify areas for improvement. Benchmarking with a trusted business advisor can highlight quick wins to increase the profit in a business. A business advisor with clients in the same sector will have access to lots of data that can help drive strategic business decisions and increase profit.
A new mantra
We control the business, the business doesn’t control us. Matthew suggests this mindset when reviewing profit – understanding that for so long businesses may have focussed on client and customer care whilst running a business and remaining compliant with HMRC.
Using this mantra can reframe how SMEs perceive running a business – importantly being that SME leaders are the ones in control.
Take time out to plot and plan the future of the business. Write the plan down, review it regularly and expect the plan to change and evolve as the world and the way in which business is done changes with time. Take control of the business, seek trusted business advice to reach and achieve the goals and objectives set.
Get in touch
Our team of trusted business advisors have helped many SME clients review their business for profit and helped many businesses return to profit quickly pre COVID and especially during. Cash is critical in a business, it ensures survival. Our team of experts can help ensure your business makes a profit now and in the long term to ensure your business’s finances can be sustained.
To discuss reviewing your profit or to strategise on how to generate more profit in your business, please get in touch with firstname.lastname@example.org